bcorp-20221001

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 01, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-01043

____________

Brunswick Corporation

(Exact name of registrant as specified in its charter)


Delaware						36-0848180
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045-3420

(Address of principal executive offices) (Zip code)

(847) 735-4700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, par value $0.75 per share

New York Stock Exchange

Chicago Stock Exchange

6.500% Senior Notes due 2048

BC-A

New York Stock Exchange

6.625% Senior Notes due 2049

BC-B

New York Stock Exchange

6.375% Senior Notes due 2049

BC-C

New York Stock Exchange

The number of shares of Common Stock ($0.75 par value) of the registrant outstanding as of October 27, 2022 was 72,506,515.

BRUNSWICK CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

October 1, 2022

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3













Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	37


PART II – OTHER INFORMATION



Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38



Item 6.	Exhibits	39

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended
(in millions, except per share data)	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	$	1,698.2	$	1,427.2	$	5,229.5	$	4,415.2
Cost of sales	1,199.3		1,016.8		3,710.6		3,126.0
Selling, general and administrative expense	186.2		165.9		586.1		490.3
Research and development expense	50.4		35.5		152.0		107.1
Restructuring, exit and impairment charges	24.6		—		24.6		0.7
Operating earnings	237.7		209.0		756.2		691.1
Equity earnings	1.3		0.3		2.8		1.5

Other expense, net	(0.1)		(1.6)		(1.3)		(4.4)
Earnings before interest and income taxes	238.9		207.7		757.7		688.2
Interest expense	(26.1)		(16.9)		(70.4)		(47.1)
Interest income	1.9		0.8		2.5		1.9
Loss on early extinguishment of debt	—		(4.2)		(0.1)		(4.2)
Transaction financing charges	—		(4.0)		—		(4.0)
Earnings before income taxes	214.7		183.4		689.7		634.8
Income tax provision	46.5		38.8		148.7		141.4
Net earnings from continuing operations	168.2		144.6		541.0		493.4




Net loss from discontinued operations, net of tax	(4.4)		(1.5)		(5.7)		(1.6)
Net earnings	$	163.8	$	143.1	$	535.3	$	491.8

Earnings per common share:
Basic
Earnings from continuing operations	$	2.27	$	1.86	$	7.16	$	6.33
Loss from discontinued operations	(0.06)		(0.02)		(0.08)		(0.02)
Net earnings	$	2.21	$	1.84	$	7.08	$	6.31

Diluted
Earnings from continuing operations	$	2.26	$	1.85	$	7.12	$	6.28
Loss from discontinued operations	(0.06)		(0.02)		(0.08)		(0.02)
Net earnings	$	2.20	$	1.83	$	7.04	$	6.26

Weighted average shares used for computation of:
Basic earnings per common share	74.2		77.7		75.6		78.0
Diluted earnings per common share	74.5		78.3		76.0		78.6

Comprehensive income	$	158.0	$	140.6	$	527.1	$	499.5



The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Assets
Current assets
Cash and cash equivalents, at cost, which approximates fair value	$	457.4	$	354.5	$	1,486.4
Restricted cash	11.7		12.2		10.9
Short-term investments in marketable securities	34.5		0.8		0.8
Total cash and short-term investments in marketable securities	503.6		367.5		1,498.1
Accounts and notes receivable, less allowances of $8.9, $9.7, $10.3	557.7		485.3		451.1
Inventories
Finished goods	754.4		685.5		520.2
Work-in-process	224.0		176.8		162.7
Raw materials	451.4		345.7		257.6
Net inventories	1,429.8		1,208.0		940.5
Prepaid expenses and other	103.9		63.8		52.3

Current assets	2,595.0		2,124.6		2,942.0

Property
Land	42.2		34.7		18.9
Buildings and improvements	547.2		479.3		453.3
Equipment	1,425.1		1,332.4		1,299.5

Total land, buildings and improvements and equipment	2,014.5		1,846.4		1,771.7
Accumulated depreciation	(1,031.0)		(989.6)		(982.6)
Net land, buildings and improvements and equipment	983.5		856.8		789.1
Unamortized product tooling costs	237.6		190.1		172.4
Net property	1,221.1		1,046.9		961.5

Other assets
Goodwill	962.2		888.4		443.8
Other intangibles, net	1,005.4		1,052.1		549.2
Deferred income tax asset	137.7		146.0		132.7
Operating lease assets	111.4		92.8		83.1
Equity investments	47.7		43.8		41.3
Other long-term assets	44.4		30.4		27.0

Other assets	2,308.8		2,253.5		1,277.1

Total assets	$	6,124.9	$	5,425.0	$	5,180.6

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents


(in millions)	October 1, 2022		December 31, 2021		October 2, 2021
Liabilities and shareholders' equity
Current liabilities
Short-term debt and current maturities of long-term debt	$	84.9	$	37.4	$	43.2
Accounts payable	631.6		693.5		589.8
Accrued expenses	662.8		711.3		623.3

Current liabilities	1,379.3		1,442.2		1,256.3

Long-term liabilities
Debt	2,419.1		1,779.0		1,787.7
Postretirement benefits	62.7		66.5		70.8
Operating lease liabilities	95.7		75.5		67.6
Other	167.1		147.6		148.5

Long-term liabilities	2,744.6		2,068.6		2,074.6

Shareholders' equity
Common stock; authorized: 200,000,000 shares, $0.75 par value; issued: 102,538,000 shares; outstanding: 72,612,000, 76,933,000 and 77,134,000 shares	76.9		76.9		76.9
Additional paid-in capital	386.0		394.5		388.3
Retained earnings	3,173.0		2,720.1		2,644.5
Treasury stock, at cost: 29,926,000, 25,605,000 and 25,404,000 shares	(1,595.2)		(1,245.8)		(1,225.0)







Accumulated other comprehensive loss	(39.7)		(31.5)		(35.0)
Shareholders' equity	2,001.0		1,914.2		1,849.7

Total liabilities and shareholders' equity	$	6,124.9	$	5,425.0	$	5,180.6

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

BRUNSWICK CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
(in millions)	October 1, 2022		October 2, 2021
Cash flows from operating activities
Net earnings	$	535.3	$	491.8
Less: net loss from discontinued operations, net of tax	(5.7)		(1.6)
Net earnings from continuing operations, net of tax	541.0		493.4
Stock compensation expense	16.8		22.7
Depreciation and amortization	167.9		127.9
Pension funding, net of expense	(0.5)		(1.7)

Asset impairment charges	19.2		0.8

Deferred income taxes	4.0		(5.3)

Changes in certain current assets and current liabilities	(426.8)		(223.4)
Long-term extended warranty contracts and other deferred revenue	12.2		12.0


Income taxes	(17.0)		29.0
Other, net	(3.0)		19.7
Net cash provided by operating activities of continuing operations	313.8		475.1
Net cash used for operating activities of discontinued operations	(2.4)		(10.5)
Net cash provided by operating activities	311.4		464.6

Cash flows from investing activities
Capital expenditures	(299.3)		(180.2)
Purchases of marketable securities	(60.0)		—
Sales or maturities of marketable securities	26.3		55.9
Investments	(4.9)		(9.1)
Acquisition of businesses, net of cash acquired	(95.7)		(50.3)
Proceeds from the sale of property, plant and equipment	5.7		5.6
Cross currency swap settlement	16.7		—


Net cash used for investing activities	(411.2)		(178.1)

Cash flows from financing activities
Proceeds from issuances of short-term debt	127.8		—
Payments of short-term debt	(125.0)		—
Net proceeds from issuances of long-term debt	741.8		994.4
Payments of long-term debt including current maturities	(58.4)		(113.6)
Net premium paid on early extinguishment of debt	(0.1)		(4.2)
Common stock repurchases	(360.0)		(98.7)
Cash dividends paid	(82.4)		(73.0)
Proceeds from share-based compensation activity	—		0.5
Tax withholding associated with shares issued for share-based compensation	(16.4)		(13.2)
Other, net	(3.9)		(7.8)


Net cash provided by financing activities	223.4		684.4

Effect of exchange rate changes	(21.2)		(3.9)
Net increase in Cash and cash equivalents and Restricted cash	102.4		967.0
Cash and cash equivalents and Restricted cash at beginning of period	366.7		530.3

Cash and cash equivalents and Restricted cash at end of period	469.1		1,497.3
Less: Restricted cash	11.7		10.9
Cash and cash equivalents at end of period	$	457.4	$	1,486.4

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Table of Contents

Brunswick Corporation

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


(in millions, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2021	$	76.9	$	394.5	$	2,720.1	$	(1,245.8)	$	(31.5)	$	1,914.2
Net earnings	—		—		174.2		—		—		174.2
Other comprehensive income	—		—		—		—		9.9		9.9
Dividends ($0.365 per common share)	—		—		(28.0)		—		—		(28.0)
Compensation plans and other	—		(20.0)		—		9.4		—		(10.6)
Common stock repurchases	—		—		—		(79.8)		—		(79.8)
Balance at April 2, 2022	76.9		374.5		2,866.3		(1,316.2)		(21.6)		1,979.9
Net earnings	—		—		197.3		—		—		197.3
Other comprehensive loss	—		—		—		—		(12.3)		(12.3)
Dividends ($0.365 per common share)	—		—		(27.4)		—		—		(27.4)
Compensation plans and other	—		6.3		—		1.0		—		7.3
Common stock repurchases	—		—		—		(140.2)		—		(140.2)
Balance at July 2, 2022	76.9		380.8		3,036.2		(1,455.4)		(33.9)		2,004.6
Net earnings	—		—		163.8		—		—		163.8
Other comprehensive loss	—		—		—		—		(5.8)		(5.8)
Dividends ($0.365 per common share)	—		—		(27.0)		—		—		(27.0)
Compensation plans and other	—		5.2		—		0.2		—		5.4
Common stock repurchases	—		—		—		(140.0)		—		(140.0)
Balance at October 1, 2022	$	76.9	$	386.0	$	3,173.0	$	(1,595.2)	$	(39.7)	$	2,001.0


(in millions, except per share data)	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2020	$	76.9	$	383.8	$	2,225.7	$	(1,133.7)	$	(42.7)	$	1,510.0
Net earnings	—		—		169.3		—		—		169.3
Other comprehensive income	—		—		—		—		5.6		5.6
Dividends ($0.27 per common share)	—		—		(21.0)		—		—		(21.0)
Compensation plans and other	—		(12.6)		—		7.2		—		(5.4)
Common stock repurchases	—		—		—		(15.9)		—		(15.9)
Balance at April 3, 2021	76.9		371.2